Union pushed; Trop fell

Behind the scenes, the Culinary and its parent helped bring about the loss of Tropicana’s New Jersey license and its filing for bankruptcy protection

Fri, May 9, 2008 (2 a.m.)

Chris Morris

The owners of the Tropicana might have filed for bankruptcy protection regardless of labor union tactics.

But the Culinary Union and its parent certainly saw where the Tropicana, a long-standing nemesis, was vulnerable. And the union then set itself on a course of action that it knew would lead to the company’s financial unraveling.

The gaming company has filed for bankruptcy reorganization after the union’s parent, Unite Here, led a successful charge for the revocation of its New Jersey gaming license.

The union’s maneuvers reveal its strategy in nasty contract disputes: Take the fight beyond the negotiating table and to members of corporate boards or, as in the case of the Tropicana, try to hasten bankruptcy.

Unite Here did it with the help of its Las Vegas and Atlantic City affiliates.

Union leaders say they didn’t set out to force the bankruptcy of Tropicana Entertainment, the gaming subsidiary of Columbia Sussex Corp. But they concede that when they fought to have the company’s New Jersey gaming license revoked last year, they knew the company was so highly leveraged that bankruptcy was all but inevitable.

“We knew they were a house of cards,” said Robert McDevitt, head of Unite Here Local 54, the Culinary’s Atlantic City counterpart. “If you pulled out the main driver for income, it wouldn’t take long for the rest of it to come tumbling down.”

Indeed the company, still smarting from its battle with Unite Here, seemed to imply in its Chapter 11 bankruptcy filing this week that the union’s “very public, political and vociferous” campaign in Atlantic City had played a key role in the Casino Control Commission’s decision. The company said the commission’s ruling was based on “misinterpretation of one of its own regulations, as well as ... consideration of matters outside its regulatory authority.”

License revocation, the company noted, was “advocated only by the union.”

Tropicana declined to elaborate beyond the court record. “We’re trying to reorganize the company and create a future for it,” spokesman Hud Englehart said. “There’s nothing for us to say about (the union). There’s no sense in dredging up the past.”

Columbia Sussex Corp. Chief Executive William Yung initially expressed reservations about entering the New Jersey casino market because of the state’s “strong, militant unions,” according to a former Tropicana executive who testified in the licensing hearings.

He was right to be concerned.

Richard Hurd, a labor relations expert at Cornell University, said the Tropicana campaign is representative of the kinds of corporate pressure tactics Unite Here has employed in the past, to great effect.

For instance, when the Culinary wanted to organize workers at the vehemently anti-union MGM Grand in the 1990s, it conducted opposition research on members of the parent company’s board of directors. The union created bad publicity for the directors, who often sat on other corporate boards. The union attacked those other companies as well. Soon enough, sitting on the MGM board became more trouble than it was worth, and MGM was forced to deal. It gave the union a year to organize workers, free from retaliation.

“They want firms they can deal with, firms that will negotiate and accept industry standards,” Hurd said. “Any time they are dealing with a company that fights the union at every stop, their goal is to inflict as much pain as possible.”

The message to employers, Hurd said, is clear: Change your tune or leave.

In the case of the Tropicana, the Atlantic City local didn’t like what it was hearing. After a second round of layoffs last spring, McDevitt, the union boss, told Tropicana executives, as well as other Atlantic City operators, “We’re going to war with this company.”

He expected some pushback. None came. The reactions from the city’s other casino operators ranged from indifference to downright encouragement, McDevitt said.

And so Local 54 began a coordinated attack. Among those involved in the strategy sessions were international Co-President John Wilhelm and Las Vegas Culinary leader D. Taylor, who also runs Unite Here’s gaming division.

Researchers in Las Vegas and New England began collecting information on staffing levels and health standards at the property. Members conducted customer surveys of Tropicana patrons on the Atlantic City boardwalk. The information served as the basis of a damning report the union issued to hundreds of investors and analysts that fall.

Customers and workers alike complained of bedbugs, roaches and filthy rooms.

Meanwhile the union was conducting a public campaign, announcing in the news media that it would oppose Tropicana’s relicensing. It also worked its political connections in the New Jersey Legislature, making its case against the company and lobbying to be a party in the licensing hearings.

At the same time, the Culinary Union was battling with Tropicana management at the bargaining table in Las Vegas. The company had already cut hundreds of workers’ jobs and was proposing to take away the union’s prized health care and pension plans, hallmarks of its contracts citywide.

Negotiations were at a standstill, and much was riding on the New Jersey licensing hearings in December. “We knew that if we were successful in New Jersey there was going to be a cascading effect,” McDevitt said. In other words, union officials hoped a revocation in Atlantic City would prompt scrutiny from regulators elsewhere, including Nevada.

The New Jersey Casino Control Commission ultimately denied Tropicana’s license renewal, saying the company lacked the good character, business ability and financial responsibility required under state law.

In their report and public comments, commissioners downplayed the union’s influence, saying their decision was based purely on regulatory violations such as the company’s failure to set up an independent audit committee. But industry observers said Unite Here created such bad publicity for Tropicana that regulators would have been hard-pressed to act otherwise.

“They stoked the public fire,” said Joseph Weinert, senior vice president of Spectrum Gaming Group, an Atlantic City-based consulting company. “I would find it difficult to believe that the casino control commissioners were not in some way influenced by the drumbeat of Local 54.”

The property has since been placed under state control and is now on the auction block.

In Las Vegas, within days of the decision, the Culinary Union stepped up the pressure, submitting a report to the Nevada Gaming Control Board detailing what it said was evidence that deteriorating security conditions posed a safety threat to workers and the public and bring disrepute on the gaming industry.

After hiring a private investigator, the union alleged that prostitutes and pimps have a regular presence at the casino. Culinary head Taylor also blasted the company for what he called widespread payroll problems, saying workers were being routinely shorted.

Then, last month, the union highlighted an incentive program Tropicana maintained for housekeepers: The company offers a $25 reward to maids who catch live bedbugs.

The campaign, however, did not have the desired effect. Nevada regulators said they were monitoring the situation but have found no violation of gaming laws.

The union’s goal, nevertheless, remains the same.

“We think that Bill Yung should be gone,” Taylor said.

The Culinary may yet get its wish. The company filed for bankruptcy court protection this week and shortly thereafter Tropicana bondholders petitioned the U.S. Bankruptcy Court in Delaware for Tropicana Entertainment to be placed under a court-appointed trustee’s control.

More reserved than his Atlantic City counterpart, Taylor downplayed the union’s role, saying the company’s own business practices led to its downfall. He did, however, offer a parting shot: “Tropicana did not view workers as a valuable commodity, and I think they regret it now.”

Discussion: 11 comments so far…

By HelenWeils

5/9/08 at 6:49 a.m.

Suggest removal

Anybody who doesn't believe that the unions are a bunch of thugs and gangsters is naive. They should be eliminated and that includes the government employee unions.
By buck

5/9/08 at 10:16 a.m.

Suggest removal

Looks like they showed them! Typical union way of thinking. They would prefer to close down a company, and risk everybody losing their jobs than negotiate a contract that is fair for everybody.
By GOD

5/9/08 at 11:46 a.m.

Suggest removal

Unions should be soooo proud.

They are taking responsibility for putting the Trop into bankruptcy (and many people out of work), they've put the airlines into major jeopardy and the U.S. automakers out of business too.

Good job unions, you're really looking out for America!
By wagner10

5/9/08 at 1:57 p.m.

Suggest removal

The Unions went after the Frontier, The Elardi family fought 'em for, what was it 6 years, the union finally got their wish. The Frontier's gone along with all those jobs. Now it's the Tropicana.

In the end, it'll be the unions that bring Las Vegas down
By mikeg

5/9/08 at 2:28 p.m.

Suggest removal

Here's what all of you guys are missing though: the union may be run by a bunch of thugs and gangsters, but the white collar criminal management team they fought was just as dirty. Thugs vs thugs.

You are all taking the devil's advocate position that mangament at major companies are saints looking out for the greater good, which just isn't true. Get real. Even a dirty union can only hope to match the dirty tricks your average mangament team incorporates into day to day operations. Study any major American bankruptcy filing and you will find blood on the hands of the executives.
By MikeofNLV

5/10/08 at 2:44 a.m.

Suggest removal

A few questions...do you anti-union folks work a 40 hr week? Does your job include health insurance? do you make a decent wage? Do fringe benefits come with your job? Are your preteens working 7 days a week for virtually pennies?

If you answered yes to any or all of the questions you need to realize you have unionized labor to thank for it..Without unions there wouldn't be a decent wage in sight..Consider the CEO's that have stock prices declining..make over 400 times their average employees salary (in the 80's it was 40 times) Then when they nearly destroy the company they receive golden parachutes in the millions (often over 100 million) The stock options, where they make a killing, originally proffered at then below market prices..get replaced with options at a price under the destroyed current stock prices. The rare "sucessful" CEO has slashed jobs, wages and benefits then often send the workers jobs to another country . How about takeovers hostile or otherwise? In the 80's the rules for funding pension plans were relaxed so companies no longer fully funded that pension plan..Large Corporations rushed in stole every penny possible from the plan and then sold the company..Usually ending up with a tax write off loss.It's about time people voted their pocketbook and self interests.
Now let's look at the management assault on unions. Removing the chance for unions to support candidates, while funneling $100's of thousands to pro management opponents. Our oil companies like exxon making $40,000,000,000 profits a year and gas hovering just below $4 a gal.

Union member and damn proud of it!
By suave

5/10/08 at 8:43 a.m.

Suggest removal

Yes, Local 54 in Atlantic City waged an all out
war against Tropicana management because they
had lost hundreds of dues paying members. Do
not forget that unions are in business to collect
dues first, pay their fat cat bosses second, just
like corporate counterparts and lastly, to attempt
to represent their rank and file. The saddest part
of all is the failure of bloated government to step
in way before all of this went down. The biggest
problem in America today is the complete absence
of real leadership and decisiveness in all levels
of government, with rare exceptions scattered about.
Where was the regulation to stop a privately held
company from stripping labor costs early on? The
horse had left the barn many, many months before
the state of NJ regulators got off their butts and
acted. Maybe casino inspectors should spend a couple
of hours a week off the casino floor and look around!
By GOD

5/10/08 at 11:29 a.m.

Suggest removal

Everyone knows this... UNIONS = LAZY!

I laugh every time I see a union sticker on a beat up pickup truck or a truck with a drunk driver behind the wheel heading to work!
By Oliver07

5/10/08 at 6:58 p.m.

Suggest removal

Suave, I think you've got it right. A person has to wonder where the leadership and honest regard for other members of the human race has gone. Whether its union leadership, business leadership or government leadership........its every man and woman for him or herself these days. So what if all the jobs at one business are lost.....the union "leadership" got its way. And no one is really saying that companies don't need oversight......they certainly do....but to the extent that it just causes them to go out of business, rather than coming up with a good solution that allows the normal, working person to keep their job.....that's not oversight. That's just being power-hungry.
By Shamrock

5/10/08 at 8:19 p.m.

Suggest removal

I see both sides of the story and from several angles here. Unions were a benefit to our country in the early part of the 1900's and serve a purpose of working on decent work rules for employees in large companies. While I see a needfor unions to some extent to counter the corporate boards and management, their philosophy isn't working because it's the government's job to create rules that are by and for the people to benefit society as a whole.

The problem is that the government is filled with Attorney Politicians who are coerced by Attorney Lobbyists that are paid for by Corporations and the Rich/Business Interests out to protect themselves.

That is called "The American Apartheid" , and we're not talking about skin color or ethnic heritage here, it's about the policies of economic oppression that have been damaging our country as a few gain while we and our children all loose in the long run.

While unions have their part to play for sure, this must be done within reason and unfortunately we don't have reasonable unions in many cases. When I was younger I was a part of a hotel union and while I had health insurance, I had a lower wage at the Westin stocking minibars at $4.20hr when the non union Sheraton was $5.95 & the Four Seasons was $6.45hr with health benefits, but they didn't have to pay $30 a month in dues either.

Now being an event manager, My exhibitors get royally screwed over by union employees with the "No Power Tool Rule" (meaning an exhibitor cannot use a power tool to assemble their own booth on an expo floor and must pay a union guy to do it), move in and out rules that say union employees must move the exhibitors booths into and out of the building thereby costing them more to exhibit and us booth sales. We can't forget about the outrageous gratuity charges for any food service that hovers in the 20% range on already way overpriced food.

Then there's the government union employees who being employees that are there for the benefit of the people, by the people and for the people, who SCREW OVER the people, by not being accountable due to the union for actually doing their jobs FOR the people who pay for their employment.

As for another venture assembling a product that I'm getting going, We'll pay a Living Wage and provide some kind of health benefits (hopefully our next president will make that more affordable for all of us)& go the extra mile with flex time for families and other perks, because keeping your employees happy and a part of the company for the long term insures success for everyone. Yet we still have the competition problems and government oppression problems that cause companies to pack up and go to other countries where those issues don't exist or are applied with common sense to not screw over a business and put them out of business.

So Big Corporate Unions, YES, Government Unions, NO, Growing Business Unions, NO. It's just common sense.
By europa92103

5/31/08 at 11:22 a.m.

Suggest removal

The unions are a right that workers have to protect themselves from corporate greed. With corporations paying CEO's hundreds of times more than their workers, using corporation funds for political purposes, thereby also screwing the stockholders out of dividend money. it is only fair to have unions to let those who make all these profits possible, the regular workers get their fair share.